So a report by the Mortgage Bankers Association says that the number of mortgage applications plummeted thanks to a large jump in interest rates. Sounds bad when you equate economic recovery with housing starts, but on the other hand if you look at where the interest rates ended up, 5.25% for a 30-year fixed mortgage, and if you're old enough to remember interest rates that were double figures, you find it hard to exclaim, "Holy crap that's a high rate!" I can still remember my Mom being happy about her 13%-ish interest rate back in the late 70s or early 80s. After all just a few years earlier rates were closer to 20%. Don't believe me? Check out this table of prime interest rates since 1947 and pay particular attention to the jump in rates from October, 1980 to December, 1980, from 13.5% to 21.5%. Ouch.
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Befuddled 
Check out the effective fed funds rate:
http://www.federalreserve.gov/releases/h15/data/Monthly/H15_FF_O.txt
It was consistently in the teens in the early 80’s and was Volcker’s way to combat inflation. Here is inflation for that period:
http://inflationdata.com/inflation/Inflation_Rate/HistoricalInflation.aspx?dsInflation_currentPage=2
If inflation is running 10% and you have a 15% mortgage, your situation is not that much different than if you have no inflation and a 5% mortgage. But that 5% with 2.5% deflation is worse than the 15% w/10% inflation.
Thanks WG. That’s good stuff, and honestly that’s the kind of perspective
I’d love to get from media stories about the economy. I’m no economist so
I’m quite capable of getting this stuff wrong. Thanks again. Jon